Automating loan applications to drive market dominance
Idaho, USA
At a Glance
• Instant increase automation in loan applications by 5%
• 20,000 loan applications immediately cleared
• 70% (c.40,000) of all loan
applications completely automated, an increase of 20%
• Loan application and funding times cut by 50%, to 12-18 minutes
• HELOC application periods reduced from one month to 18 days
• Customer base grown by 10-15%
• Customer satisfaction improved by 5-10%
Idaho Central Credit Union (ICCU) is the largest state chartered credit union in Idaho. In the last 5-7 years it has expanded its footprint beyond Idaho, to encompass people living and working in Washington state, and also parts of Oregon. It currently has $10bn in assets, making it in the top 20 credit unions in the country.
Launched in 1940, its mission has been to help members achieve financial success. Alongside traditional consumer services, such as deposits, savings and loans, it offers wealth management, financial planning and insurance products, and also has a business division.
An appetite for innovation
As a member-led organization, ICCU is continually having to adapt to changing consumer sentiment shaped by macro-economic trends. For example, in recent years, high interest-rates have encouraged savers, but put lenders at risk while also increasing living costs, which can negatively impact membership. Innovation has been key to this adaptability, explains Wade Saunders, ICCU’s SVP of Consumer Lending.
“The purpose of our innovation has a lot to do with how our members engage with us. Increasingly that is via digital channels, but we also want to enhance the branch experience, so that whatever channel our members prefer, we are their first choice.”
Futureproofing better lending
A recent focus for ICCU has been on improving the loan application experience for members. Its incumbent Loan Origination System (LOS) had been sunsetted by the vendor, which forced ICCU to look for alternatives. A key criteria was automation.
“We wanted to identify points of friction in our processes that can be eliminated with automation, and create the ability to process loan applications without employee-intervention.”
Wade explains that Temenos was one of the first options out of the gate, because of the ability to customize its solution. ICCU also had an eye on the future, and a partner that could support deposits and accounts as well as loans. More generally, this scalability was a key reason why ICCU selected Temenos. Having experienced growth of up to 20% in the last decade, and forecasting a similar trajectory, ICCU wanted a provider that could manage this expansion.
“We wanted a technology partner that is willing to grow with us, and invest in its entire suite of solutions as we continue to scale.”
Immediate impact
ICCU deployed three products from the Temenos digital platform: Account Origination (through Journey Manager) which went live in 2020; as well as Collections and Loan Origination (both live from 2021). The impact was immediate.
On day one of flipping the switch on Account Origination, we increased automation in loan applications by 5%. From a workload perspective, that was an immediate relief. We were able to clear over 20,000 loan applications, and redeploy the manpower to learn other parts of the new system.”
Wade Saunders, SVP of Consumer Lending at ICCU
Wade puts this success down to the expertise that Temenos has in managing large deployment projects.
“We didn’t have any red flags with the launch, and that’s down to all the testing we did with Temenos, and the transparency of our conversations. Being able to be really honest with each other, and take points professionally not personally, has been a key feature of our partnership so far.”
One area where the new solutions have had a big impact is the ICCU’s credit card division.
Previously we needed a person to process every credit card application. Temenos enabled us, almost immediately, to automate that. A person could apply online, get approval, get their loan documents, sign them and get access to their funds all without the involvement of an employee.”
Wade Saunders, SVP of Consumer Lending at ICCU
ICCU has also applied the Temenos solution to its HELOC (home equity line of credit) product, with similar impact. HELOC applications had been taking up to a month to process; this has been reduced to around 18 days, 41% faster.
“We’re now able to order property title documents and integrate that within the system, so we avoid the delays from errors in manually inputting this information.”
Act like an underwriter
A major benefit of Temenos has been the ability to leverage historical underwriting data in the system, explains Wade.
“Because we have the data about how an underwriter is likely to score an application, we can go straight to approving or declining them, and so decrease the amount of ‘undecideds’ that need to be manually checked.”
Today, 70% of all ICCU’s loan and credit applications are processed completely automatically.
Today, with the push of a button, loans are processed and funded without a person having to do anything. We’re talking about 30-40,000 loans every year that don’t require any manual intervention.”
Wade Saunders, SVP of Consumer Lending at ICCU
Today, a customer can complete a loan application and receive funding in as little as 12-18 minutes, around 50% faster than before. And by using the data to continually retrain the system, Wade and his team will see that percentage improve further.
Accuracy, first time
Temenos IMM (‘Image Management Module’), an integrated feature of Originations, has also had profound benefits.
“We’ve seen an increase in the accuracy of the loan documents, so we don’t have to chase up members for the correct information.”
This has not only made the process more efficient. “These are key compliance documents. So the fact we can trust Temenos’ IMM more than our previous solution means we can go faster with the confidence that we are maintaining regulatory standards.”
The new system also makes it easier for members to submit the documents needed to support their application, by allowing them to upload them to a central portal instead of emailing, faxing or sending by post.
Happier customers = more customers
The result of all this has been to increase digital engagement and satisfaction; on the latter, the company has seen an increase of 5-10% in recent years. This growing reputation has attracted new customers. In the last few years, ICCU has grown its membership by 10-15%.
Temenos has helped us to figure out what a great online experience looks like. We’ve now got a viable product that is enabling us to accelerate in the market, and a partner that is proactively driving us to make more improvements.”
Wade Saunders, SVP of Consumer Lending at ICCU
Just the start…
ICCU is making good on its strategy to achieve growth through a deepening partnership with Temenos. Wade is looking to apply auto-decision making to its HELOCs business.
Looking to the future, Temenos’ API architecture offers huge potential, says Wade. “It gives us access to Temenos’ partner ecosystem, plus other vendors with solutions we may want to integrate. That’s almost limitless capabilities to allow us to move in any direction we want to.”
One example that Wade and his team are now exploring is the connector with ‘Dealertrack’. That integration will allow ICCU to automatically populate information from car dealers into Temenos, and so significantly reduce manual processes and paperwork when making car loans.
He is also keen to expand Temenos to reshape the company’s network loan business. “Our contractors use one of eight different loan systems and processes. So there’s a huge scope to bring efficiencies here too.”
Whichever direction ICCU will choose, Wade is confident that the relatively new partnership with Temenos has durability. That was recently evidenced when Wade was invited to share his story at the Temenos Credit Union Fall Forum. “We have hundreds of vendors, but our relationship with Temenos means a lot.”